Attached files
| file | filename |
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| 8-K - FORM 8-K - ADA-ES INC | d263227d8k.htm |
| EX-99.2 - PRESS RELEASE - ADA-ES INC | d263227dex992.htm |
 Investor Presentation
December 2011
NASDAQ:ADES
Exhibit 99.1
Creating a Future with
Cleaner Coal |
 Please note
that this presentation contains forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, which provides a "safe harbor" for such statements in certain
circumstances. The forward-looking statements include, but will not
necessarily be limited to, statements or expectations regarding the growth in markets for our
products and services; amount and timing of revenues, earnings, operating income, cash flows
and other financial measures; timelines for our projects; scope, timing and impact of
current and anticipated regulations and legislation; future supply and demand;
the
number
of
refined
coal
facilities
to
be
installed
by
year
end
and
the
amount
of
refined
coal
capable
of
being
produced from such facilities; and related matters. These statements are based on
current expectations, estimates, projections, beliefs
and
assumptions
of
our
management.
Such
statements
involve
significant
risks
and
uncertainties.
Actual
events
or
results
could
differ
materially
from
those
discussed
in
the
forward-looking
statements
as
a
result
of
various
factors,
including
but
not
limited
to,
changes
in
laws
and
regulations,
government
funding,
prices,
economic
conditions
and
market
demand;
timing
of
regulations and any legal challenges to them; impact of competition; availability, cost of and
demand for alternative energy sources and other technologies; technical, start-up
and operational difficulties; inability to commercialize our technologies on favorable
terms; our inability to ramp up operations to effectively address expected growth in our target markets; additional risks
related to Clean Coal Solutions, LLC (“Clean Coal”) including failure of its leased
facilities to continue to produce coal which qualifies for IRS Section 45 tax credits,
termination of the leases for such facilities, decreases in the production of refined coal by
the
lessee,
seasonality
and
failure
to
build
or
monetize
new
CyClean
and
M45
facilities
to
meet
the
Section
45
tax
credit
placed-in-
service date; issues arising out of Clean Coal’s due diligence review of the M45
technology and our inability to address those concerns or negotiate, execute and close
on definitive agreements; availability of raw materials and equipment for our businesses;
loss
of
key
personnel;
intellectual
property
infringement
claims
from
third
parties;
and
other
factors
discussed
in
greater
detail
in
our filings with the Securities and Exchange Commission (SEC). You are cautioned not to
place undue reliance on such statements and to consult our SEC filings for additional
risks and uncertainties that may apply to our business and the ownership of our
securities. Our forward-looking statements are presented as of the date made, and we
disclaim any duty to update such statements unless required by law to do so.
Disclaimer
-2- |
 Portfolio of
technologies allows existing coal-fired power plants to operate cleaner Multiple
technologies target mercury, SO 2
, NO
X
, and CO
2
; demonstrated ability to
reduce mercury emissions by 80-90%
Diverse business model—systems, services and technology licensing
Large market opportunity
–
coal-fired generation comprises ~50% of U.S. power
–
new EPA regulations driving demand for mercury and other pollutant reduction
technologies –
ADA offers low CAPEX solutions for coal plant operators
Two Refined Coal systems currently operational
26 additional Refined Coal systems expected to be “placed-in-service”
by year-end
2011 for a total RC capability of $50 MM in annual EBIT for 10 years
2011 nine-month revenues up 116%, operating income of $3.1 million
May 2011 equity investment in ADA JV by The Goldman Sachs Group affiliate
Investment Highlights
-3- |
 ADA’s
Emissions Solutions for the Existing Fleet
-4-
Supply emission control technologies based upon minimal capital
cost for new equipment
–
Doesn’t require 10-20 years of extended plant life needed to justify large
equipment costs
Low CAPEX alternatives trade variable operating expenses for fixed
capital costs
Examples for a 250 MW Plant:
–
Allows continued operation of the plants that may otherwise be
–
Provides continuous revenues for ADA vs. one time equipment sales
–
High CAPEX: Wet Scrubber $100+ mm
–
ADA Low CAPEX alternatives
–
ACI: $1 mm
–
DSI: $3 mm
–
Refined Coal: Controls mercury at no cost to utility
–
Enhanced Coal: No capital equipment; $2-$4 mm per year in increased fuel
considered
for closure
costs to the power producer |
 -5-
ACI System
for Mercury
ADA’s Low CAPEX Approach to Emissions
Control Technology
Emission Control Equipment
(NO
x
, SO
2
, Particulate) |
 Two Refined Coal
technologies reduce mercury and NOx emissions and qualify
for Section 45 Tax Credits
42.5% stake in Clean Coal Solutions JV
with NexGen & Goldman Sachs
–
2 CyClean facilities produced $20 MM in
revenue, $9MM in operating income for
ADA in first year of operation
–
Up to 26 new CyClean and M45 systems
being installed by year-end
–
Total RC activities capable of producing
$50 MM in EBIT for ADA for 10 years
ADA Segment Overview
-6-
Emissions Control
Systems
Technology
Activated Carbon Injection systems
addressing mercury emissions for coal-
fired power plants
ACI systems installed on 55 boilers to
date—in a ~ 35% market share
Pending Air Toxics Rule expected to
create $500 mm market for ACI
Cross-State Air Pollution Rule to create
demand for DSI systems for SO
control
Option for 49.9% participation in
Activated Carbon Plant capacity additions
License agreement with Arch
Coal for enhanced coal
technology to reduce mercury
emissions
Developing solid sorbent
capture technology to capture
CO
from
flue
gas
in
coal-fired
boilers
Refined Coal
2
2 |
 Clean Coal
Solutions, LLC |
 Refined Coal
Reduces Mercury Clean Coal Solutions (CCS): ADA JV with NexGen Refined Coal
LLC –
15%
equity
interest
in
CCS
sold
to
a
Goldman
Sachs
affiliate
in
May
for
$60
mm
CyClean –
patented technology enhances combustion of PRB coals in cyclone
boilers
and reduces mercury and NOx emissions
Two systems have been operating at two power plants since June, 2010
–
Received $9 mm in prepaid rent from monetizer (GS)
–
Generated >$20 mm in revenues and $9 mm in operating income to ADA in first full year of
operation
–
Expected
to
generate
approximately
$7
mm
(
$1/ton
of
RC)
in
pretax
earnings
per
year
for
ADA for the next eight years
-8- |
 Refined Coal
Growth Opportunity In December 2010 Congress extended deadline to install new Refined
Coal facilities until the end of 2011
–
New Air Toxics Rule creating additional demand for Refined Coal
Currently fabricating up to 20 CyClean facilities
–
14 have been installed and operated at power plants to date
–
Installation/operation of remaining systems scheduled to be completed this year
–
Expect most will have permits and full operations in first half of 2012
CAPEX Financing:
–
$15mm commercial bank line of credit
–
$11mm received to date in deposits on systems from monetizers
–
$20 mm/yr in JV revenues from operations of first two units
If all planned CyClean facilities become fully operational, CCS could generate
>30 mm tons of RC producing $30mm in EBIT for ADA for next 10 years
-9- |
 CCS Project
Monetization Overview
-10-
42.5%
42.5%
15.0%
$6.33/ton plus
accelerated depreciation
Nex
Gen(NG)
ADA
Goldman
Sachs
CCS, LLC
CCSS, LLC
(50%NG/50% ADA)
not consolidated
Tax Financing
Partner
Utility
Plant
Operator
Refined
coal
Unprocessed
coal
$1/ton
produced
Tax
benefits
|
 New
technology developed by ADA and demonstrated full-scale in September expands market
for ADA’s Refined Coal beyond cyclone boilers Technology is in the process of being
licensed to Clean Coal Solutions; ADA will receive
Building 6 facilities expected to be installed before year end
If all planned M45 facilities become operational, they are expected to
generate $20mm in EBIT for ADA for the next ten years
–
Prepaid royalty payments
–
Royalties on Refined Coal produced with M45 Technology
–
42.5% distribution of profits from CCS
–
First M45 facility placed in service achieving reductions of >30% NOx and >70%
mercury –
2 CyClean facilities successfully placed in service using M45 Technology, giving Clean
Coal flexibility in choosing to use some CyClean facilities at larger plants
M45 Refined Coal Technology
-11- |
 Emissions
Control Systems |
 ADA Commercial
ACI Systems > 20 GW Sold for Mercury Control
Plant burns PRB coal or
lignite
Plant burns bituminous coal
Installed/installing ACI systems on 55
boilers at coal-fired power plants
–
Over 35% market share of 159 boilers served
for mercury control from power plants
-13- |
 Emission
Control: Growth Expected in ACI Equipment
•
Air Toxics Rule is scheduled to be final on December 16, 2011
and is expected to create $500 MM market for ACI
E
-14- |
 Control of Acid
Gases HCl, SO
2
, SO
3
Cross-State Air Pollution Rule
(CSAPR) creates a market for SO
2
control starting in January 2012
Air Toxics Rule identifies HCI and
SO
2
as surrogates for acid gases
ADA provides dry sorbent injection
(DSI) systems as a low-cost option
to wet scrubbers
Equipment costs $2-3 mm for
average size plants
EPA predicts over 200 systems will
be needed by 2015
-15- |
 Technology |
 Mercury Control:
License to Arch Coal Designed to enable Arch’s PRB coals to
burn with lower emissions of mercury and other
metals
$1.00-4.00/ton in benefits to customer
Royalty agreement –
payments to ADA of up
to $1.00/ton based on premium of Enhanced
Coal sales
Air Toxics Rule could create a market for
Enhanced PRB Coal through 2015
Full-scale tests proving effectiveness,
planning additional demonstrations
-17- |
 CO
2
Capture
Developing solid sorbent capture technology to capture
CO
2
from flue gas in conventional coal-fired boilers
DOE and industry funding:
–
Phase I -
$3.8 mm R&D program awarded in Nov. 2008 to
develop technology; successful field tests at 1 KW pilot plant
–
Phase II -
$19 mm, 51-month contract awarded October 2010 to
scale-up technology to 1 MW; key step toward
commercialization
Advantages over competing technologies:
–
For customer: lower cost and less parasitic energy
–
For ADA: continuous revenues from sale of proprietary chemical
sorbents
-18- |
 Financial |
 Summary of
Recent Financial Results Nine Months
ended
09/30/11
(1)
Nine Months
ended
09/30/10
(2)
Year Ended
12/31/10
Total Revenues
$28.7 MM
$13.3 MM
$22.3 MM
Gross Margin
69%
54%
61%
Operating Income
(Loss)
$3.1 MM
($15.5) MM
($21.0) MM
Net Loss
(per share)
($33.6) MM
($4.41)
($12.4) MM
($1.68)
($15.5) MM
($2.09)
-20-
(1)
2011 nine-month period included $41.7 MM in arbitration expenses, $4.2 MM in
non-routine litigation-related legal expenses, and $0.9 MM in interest expense
. (2)
2010 nine-month period included $16.1 MM in non-routine litigation-related legal
expenses. |
 Balance Sheet
Highlights As of 9/30/11
(1)
As of 12/31/10
Cash & Cash Equivalents
$9.6 MM
$9.7 MM
Working Capital (Deficit)
($12.0) MM
$10.1 MM
Shareholders’
Equity
$1.9 MM
$13.4 MM
Shares Outstanding
(2)
7.7 MM
7.5 MM
(1)
Working capital decreased primarily as a result of payments and obligations in the Norit
Settlement, partially offset by proceeds from the sale of a 15% interest in CCS to an
affiliate of Goldman Sachs. (2)
Shares
outstanding
at
November
28,
2011
were
~10
MM,
reflecting
completion
of
public
offering
in
October
2011
and exercise of the underwriters over-allotment option in November 2011.
-21- |
 4
th
Quarter Financial Transactions
Capital Raise, managed by Lazard, Baird, and JMP
–
$28.4 Million on the sale of 2 Million Common Shares with no Warrants
–
$4.3 Million in exercise of over-allotment option on 300k shares
Settled Indemnity Claim with Energy Capital Partners
–
Eliminated $33 Million in long-term liability
–
Will show ~ $19 Million gain in Q4
–
Gave up ~ 21% ownership in AC plant
•
No longer recording losses from JV
•
Retained option to invest up to 49.9% in new capacity additions
$5 Million in prepaid royalties expected to be earned on M-45
technology
Current cash at 11/30/11 ~ $33 Million
-22- |
 Catalysts for
Company Past 6 Months
–
May: EPA publishes draft of Mercury and Air Toxics Standard
–
May: GS pays $60 mm for 15% interest in Clean Coal Solutions
–
July: EPA finalizes Cross-States Air Pollution Rule
–
August: Settlement of Norit Arbitration
–
September: Successful M45 tests expand Refined Coal opportunity
–
October: Raised approximately $28.4 Million in registered direct offering
–
November: Settled $33 Million indemnity claim
Next 6 Months
–
Up to 26 Refined Coal facilities expected to be installed by year end
•
Capable of producing >50 mm tons of RC per year for 10 years
•
Expected to produce $50 Million in pretax earnings for next 10 years
–
December 16: EPA scheduled to finalize Mercury and Air Toxics Standard
•
Expect new contracts for ACI and DSI equipment
-23- |
 A Leader in
Clean Coal Technology ©
Copyright 2011 ADA-ES, Inc. All rights reserved.
NASDAQ:ADES |